Reader Mailbag: Fun?

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
1. Long term life insurance
2. Preparing for tax bill
3. Dental challenges
4. Fear of switching careers
5. Money from selling household items
6. Haircuts and appearance value
7. Considering purchases again
8. Emergency fund and future
9. My business partner is lazy
10. Children and television

I’m often blown away by other people’s definitions of fun. For some, you have to have alcohol to have fun. Others seem to require spending lots of money.

I’m usually pretty happy doing almost anything as long as it’s with people I like. I’m always taken aback by people who loudly announce that the current event is boring and that booze or spending need to happen in order for them to be placated.

Q1: Long term life insurance
I have had life insurance through SBLI and through my employer for a long time. My questions aren’t about how much or what kind to have. My children are now young adults, so I don’t need to worry about providing for them, but I would like to leave them and any future grandchildren a good sum when I die. The only way for me to do that would be through life insurance, as I have no money saved or invested and no time left to accumulate even a small fortune. So my questions are, is it possible to continue a life insurance policy into old age? Would it be very expensive? How is a life insurance benefit taxed when it is paid to the beneficiary? Is there any way to reduce the amount of taxes the beneficiary will have to pay? Would it be better to leave money to minors than to adults?

- Chris

There are lots of different varieties of life insurance policies out there. Generally, ones that last a person for their entire life tend to have rather high premiums – after all, the insurance company isn’t in the business of paying out more than they’re bringing in. Benefits of most life insurance policies are free from income tax.

If I were you, I would probably hang onto a very small policy – enough to cover your burial expenses – and instead start putting money directly into college savings funds for your grandchildren. After all, you don’t seem to have any direct dependents besides yourself.

In terms of bang for the buck, this is probably going to give them the greatest benefit unless you were to die exceptionally young.

Q2: Preparing for tax bill
My hubby and I were married last September. He’s been receiving retirement income for the last two years and started receiving Social Security benefits in August of last year. We were hit hard when figuring our taxes for last year. Because we’re filing as married, his SS benefits were taxable since his other income was over a certain amount. Should we have known about this? I’m wanting a way that we can prepare for the hit next year, as he will have received a full year of SS by next time. Should we just put a portion of that back each month for the tax bill?

Additionally, hubby cashed in some savings bonds last year and those were on our taxable interest statement. It seems that it kind of defeated the purpose of having them if we’re going to get hit with a huge bill because of cashing them in. Is there a way that we can make use of them without taking that huge hit?
- Olivia

For starters, you’re not going to get hit with a huge bill for cashing in the savings bonds. Let’s say you bought bonds for $500 and are now cashing them in for $1,000. If you’re in the 20% tax bracket, your tax bill for that $1,000 you just stuck in your pocket is only $100. You’re only taxed on the gains, and even then, the highest federal tax bracket is 35% (and most people are far, far below that).

Whenever you earn income that doesn’t already have taxes taken out of it, you should put half of it in a savings account designated for taxes and forget about that money. When you do your taxes, pay your bill using the money in that account, leave behind a little bit for the following year, and withdraw the rest to do with whatever you want.

That’s how I do my own taxes. All of my income requires me to pay my own taxes in this way.

Q3: Dental challenges
I usually go to this great dentist, Dr. C., but this time around she was not available on the day that I needed to do the appointment so I went to a new dentist, Dr. L. Last time I saw Dr. C, in summer 2010, she told me specifically that I do *not* need to get my wisdom teeth out (I’m 26 and still have all of them. They’ve never hurt). Dr. L told me I absolutely *need* to get them out sometime this year. She referred me to a local oral surgeon.

I looked this surgeon up and he has horrible reviews…literally not even one review says anything positive about him. He does not work with my insurance so the estimated $3000 bill would fall on me. I called my insurance company and found out that they’ll only cover up to $1000 of any dental surgery…and the closest oral surgeons they work with are 60 miles away, in another state. So I’ll still have to pay estimated $2000, plus find somebody willing to take the day off to drive me because I won’t be able to drive myself back.

Dr. L had mostly good reviews but people did mention that she tried to do a lot of referrals for wisdom teeth, veneers, teeth whitening etc, and tried to push extra services on medicaid people. And looking back on it, she didn’t mention anything about wisdom teeth until after I had said I was a federal employee (USPS). What I did not mention, because this never comes up in conversation, is that I’m classified part time, and therefore don’t get all those sweet federal benefits. I just bought myself some cheapo dental and health insurance on my own because I’m paranoid. I’d think that if my wisdom teeth were so bad, she’d mention it right off, not wait until 10 minutes into the consult.

If Dr. L was my only dentist, I would’ve booked that oral surgery appointment today, but since the other dentist said I didn’t need it, I’m confused. Maybe my teeth have changed, and I do need it, or maybe I’m being ripped off! Or maybe it’s just a difference in opinion. I’m suspicious of Dr. L because she referred me to such a bad surgeon. My current plan is to make my next appointment with Dr. C and see what she says…if she thinks I need it now then I’ll do it. Plus she is very low-cost so maybe she knows a surgeon that is cheaper.

My question is, am I reacting rationally to this, or am I cheaping out on my health? Have you ever heard of a dentist trying to upsell? This is more money than I make in a month. I have the cash in the bank to cover it, but it would make a huge dent in my downpayment-on-a-house fund, plus surgery always has risks, complications, etc.

When I was a kid (7 or 8), my parents took me to a dentist that said I needed *all* of my teeth removed. The idea being that if all my baby teeth were removed, my adult teeth would come in straighter b/c nothing would be in the way. My parents could not afford this, plus they thought it was weird, so they took me to another dentist. He said that was totally crazy and I didn’t need that at all. Maybe this is the same situation?
- Chloe

Every time a medical professional suggests a significant procedure, you need to get a second opinion on it. In this case, your original dentist seems to be against it.

If I were you, unless there was an ongoing problem, I’d leave your wisdom teeth alone. I’d talk it over with my primary dentist, but it seems like there are other issues going on here outside of your teeth.

I’m not sure what’s going on in this story, but there are certainly some strange signs coming from the second dentist. I would not make major decisions based just on the words of this person.

Q4: Fear of switching careers
My husband would like to quit his unfulfilling job to spend some time working on a new business venture. Our only debt is $65,000 remaining on our mortgage (monthly payment about $1000), but it’s a little scary to think of cutting off our reliable source of income. Do you have recommendations or advice for us? We have three children and another on the way, and I feel a little overwhelmed about where to start looking for new insurance etc. We do have about $20,000 saved and will have a little more by the time he would quit his job.

- Melinda

Unless he has a direct and very clear path to a steady income, he should not make this leap.

The only way I would ever recommend someone making such a leap is if there is going to be enough income coming in from the other person in the relationship to cover all of the bills or if the business is already earning enough income to pay the bills due to building it in one’s spare time.

If I were him, I would try to get the ball rolling on the business in his spare time before quitting the primary breadwinning job for the family.

Q5: Money from selling household items
My partner and I are currently working full time in well paid jobs. We are planning to leave New Zealand in six months for an indefinite period of time as we are going to travel around South America for 6-9 months, and then move to The Netherlands (where my partner is originally from) and try to live there for a year or two so that we can spend more time with his family and friends, and I can learn Dutch.

My question is to do with the money that we get from selling our joint house hold items. We have started to sell some stuff (mattress, garden tools, desk, etc) and so far have raised $400. Over the coming months we’ll sell pretty everything except for a few items needed to make a house a home, and the bare necessities needed to get started with which we’ll store at my parents house here in NZ. Aside from that most of our stuff will be sold via the NZ site TradeMe. We think that by the time we sell most of our household items we’ll raise about $3-4k. (This doesn’t include the car, or motorbike which is my partner’s so he’ll keep the money from the sale of that (fair enough!)).

I wanted to get your advice on what to do with the money we raise from selling our stuff. Our first idea was to put it towards our trip – so that we have to put in less money ourselves. Then I had an idea this morning that we could put it in a rolling term deposit, and use the money for set up costs when we finally come back to NZ. Another idea was to put it to one side, as we want to buy a house eventually and that could be the first bit of savings for us…

Anyway, what do you think? Should we just put it in the ‘South America’ pile, or maybe towards something else?
- Linda

I would keep it as an emergency fund that you would be able to access from New Zealand if necessary.

My first step, if I were you, would be to talk to my bank about international access to accounts. If that money were in a U.S. checking or savings account, could you access the funds easily in New Zealand? If not, I would seek out a bank that could make such funds available if necessary.

Given that, I’d just let the money sit until I returned. Ideally, you won’t have to touch it and you’ll have a cash reserve that will make your return to the United States quite easy.

Q6: Haircuts and appearance value
Almost since I’ve known him my husband has kept his hair cut very very short. He owns clippers and cuts his hair with the shortest setting about once a week all over his head. He works as a salesman. I am concerned that the haircut makes him look perhaps too aggressive to his clients and may be costing him sales and hurting our income. I’m not sure how to handle this situation.

- Emily

Clearly, something must have led you to this conclusion. I’d spend some time digging deep and figuring out exactly why you feel this way.

Then, talk to your husband about it if it concerns you. As his spouse, you do have a vested interest in the strength of his career. Be sure before you bring it up, though, that you truly understand where you’re coming from with this.

That being said, as long as his hair and appearance are kept, I think you’d have a hard time finding concrete evidence that short hair is damaging to the sales output of a competent salesperson.

Q7: Considering purchases again
Almost exactly a year ago I started reading your website while undergoing chemotherapy. At that time I had $4,000 of credit card debt and no savings. I have an excellent job as a scientist, but have had a hard time staying afloat after becoming a single mom about 5 years ago. After reading this site for the past year, tracking expenses, selling stuff on eBay, forgoing a few trips, and reducing spending I am happy to report that I am debt free, have $2,000 in an emergency fund, $500 in a vacation fund, and about $500 in an account for furniture! My question is on purchasing a couch. I’m at the age (35) where I’m starting to realize that replacing a couch will be a regular thing. The fabric couch I bought new from the store lasted 5 years with regular cleanings, the fabric couch I have now I bought off of Craig’s list 3 years ago and is increasingly uncomfortable/driving me crazy. I have wanted a leather couch for some time as I find them comfortable, easy to clean, and beautiful. They also seem to last longer (I would estimate 10 years+ instead of 5). However, I’m not sure if it’s a wise purchase and it’s a little ostentatious. 90% of my furniture is hand-me-downs / yard sales/ thrift stores. Another consideration is that as a single mom, obtaining couches second hand and getting rid of the last couch takes a lot of coordination and help from others. Is buying a leather couch wise or foolish? I have located a mid-price local furniture maker that seems to make quality products and has a few clearance centers for items with a little damage/imperfections. Also, is there a time recommendation after one finally escapes debt before one should start purchasing items again: a debtors “probationary period”?

- Billie

I’ll speak from experience with a leather couch that we bought ourselves from an “imperfection” store that they certainly do show clear wear and tear over time. We do have three young children, but our leather couch is certainly showing some significant wear at about the four year mark. The level of wear is comparable to and perhaps slightly more than the wear on the microfiber couch in our family room over the same period.

I don’t think a relatively wear-resistant couch is a bad purchase for a single mother. Just make sure you know what you’re buying before you do so. I would stick with either leather, vinyl, or microfiber with children in the house. Do your own research before you talk to a salesperson.

As for a “probationary period,” I don’t think that’s truly necessary. You just need to make sure you’re not buying things that will put you further in debt or reducing your ability to repay debt. If you have the cash in hand for this purchase and have been planning for it, then it’s a reasonable move.

Q8: Emergency fund and future
I have a really tight budget. Very little wiggle room and I don’t have much in the way of savings. However, I have finally managed to save $1,000 and, with my upcoming tax return, I will be able to pay off all of my credit card debt. However, I have one credit card that has 0% interest for 1 year. I have about 9 months left on this one year term. So, I was thinking about keeping the balance of what I owe in my ING savings account so I can collect interest and then pay the credit card off before I start getting charged a interest. What would your advice be on that?

Now that I am able to pay off all of my credit cards debt, the only debt I will have is my car loan. The interest rate is 8.24% and I still owe about $13,000. My question is, since I have my $1,000 emergency fund, should I:
1. Continue building my cushion. $1,000 won’t even cover my rent ($1,100) or daycare ($1,200) expenses. I am the single, full-time working mother of a three year old. I really have done my research and I can’t get a better deal for the hours I need.
2. Start investing. I haven’t started any savings for my daughter or for my retirement and I know how important both of those are.
3. Should I start saving for a house. It sounds far-fetched but I qualify for the VA home loan and would really like to provide my daughter with a home to grow up in.
4. Or should I do some combination of all of the above?

Here are some things to keep in mind:
1. I am currently working on refining a budget. I have one but I’m working on collecting receipts and such so I can track exactly how I am spending my money for the next couple of months and try to be even more responsible.
2. I am hoping to go back to school in the fall but it should only alter my income slightly as I will be receiving the post 9-11 GI bill which pays for school and gives me a monthly stipend.

My instinct is that I should continue building my cushion. However, I feel like it is very irresponsible for me to not at least consider to begin investing so I think I should start there. Then there’s also the fact that a good portion of my furniture is falling apart and will likely need to be replaced in the near future so I will have to figure out how to save for those items as well. I guess this is a lot to dump on you but I would really appreciate your help with setting my financial priorities.
- Kelly

Having money in a savings account is investing.

The idea that “investing” is this magical thing that will somehow make your money multiply like rabbits is foolishness. Investing simply means devoting one’s time, effort, or energy to a particular undertaking with the expectation of a worthwhile result.

When you invest in stocks – which seems to be what you’re pining for – you inherently take on some risk. Let’s say the next 12 months go like 2008 did and you lose 40% of your investment over that period, then you find yourself needing the money, then it was an awful investment.

An investment in a savings account, on the other hand, returns about 1% no matter what the economy is doing. If you find yourself needing your money back after a terrible year in the stock market, your savings account is a far better investment than the stock market.

You shouldn’t put a dime in anything besides cash unless you’re quite confident you’re not going to need that money at all for quite a few years. Most investments outside of cash are very volatile and shouldn’t be attempted unless you’ve got a strong cash supply to get you through emergencies and an understanding that there will be periods where you’re going to take an absolute beating on it.

Q9: My business partner is lazy
I work 40 hours per week at a regular job and also have a flourishing side business — so flourishing that I frequently make more money from it than from my regular job!!! My roommate lost his minimum-wage job several months ago so he is helping me out in exchange for room, board and cash here and there. We split up my profit evenly and that covers his share of the the rent, bills, some spending money etc. The problem is that he is not particularly helpful. There is no question that I couldn’t run the business — at least not to this extent — without his help, it’s just that he only does the bare minimum of work. I did the math one time and for the amount of work he’s doing it comes to something like I’m paying him up to $50/hour!

I am so swamped and have been working days 4 a.m.-9 p.m. while he works from about 2 p.m.-4 p.m. complaining the whole time! I want to start cutting back the side business as I am not ready to give up my full-time regular job. But taking fewer clients means that my roommate will have less of an “income” and might begin to fall behind on bills and rent. And like I said I really do depend on him to keep growing my business. There are just some things I can’t do because of my 40-hour/week office job and he is available to do those things. (This has been why I’m so willing to give up so much of my profit. Because it was worth it to me.) If he had a regular job then he wouldn’t be available to help me. Although honestly he’s so lazy that I don’t think he’d even get another job. So I might have him falling behind on bills and rent anyway. Sometimes I wish that I could just start over with a new roommate/helper, one who really wants to work and would appreciate the opportunity (it’s a really fun job) but I have been friends with this guy since high school and I really care about him. He’s been my roommate since college (10+ years.) And I think I am too old to go back into the old Craigslist roommate pool.

Will you help me sort this out? I am so tired and angry. I love both my jobs and also my friend so much.
- Al

This is a prime example of why friendships and finances rarely mix.

Your roommate is a freeloader. That person might be a wonderful long-time friend, but right now that person is leeching off your efforts.

You have to decide whether or not you’re okay with that. If you are, then swallow your displeasure and continue the arrangement. If you’re not, then you must have a talk with this friend about the business, and you need to separate your friendships and your business relationshps. I’d tell your friend that if I were in your shoes.

Is this person an employee/partner first or a friend first? That’s really the question here.

Q10: Children and television
My husband and I both have salaried careers that eat up at least 50 hours a week. We also have three children, like you and your wife.

How do you get anything done around the house without allowing your children to watch a ton of television? It seems like the only time we make significant progress on housecleaning, laundry, and home projects is when the children are focused on something that doesn’t undo the housecleaning.
- Fiona

For starters, we just accept that our house isn’t going to be perfectly clean while our children are young. With both parents working and with multiple young children, it is almost impossible to keep up with the wave after wave of chaos at all times.

Our solution is to allow them to watch limited television. We DVR programs that we’ve pre-screened and our children are allowed to watch thoes and nothing else.

During the week, we don’t watch any television. On the weekends, they’re allowed to watch a few programs, during which Sarah and I get caught up on things.

As the children get older, they do become better at finding ways to entertain themselves. They also become more useful with regards to the household tasks.

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.

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52 thoughts on “Reader Mailbag: Fun?

  1. Johanna says:

    Q9: It’s a little bit unfair to complain that your roommate is a freeloader when he’s just taking you up on what you’ve offered him.

    I’m seeing all kinds of contradictions in your letter. You depend on your roommate not to have a 9-5 job, and yet you resent him for not having a 9-5 job. You say it’s worth it to you to pay him half your profit, but you complain about how much you’re paying him. You want to cut back on the business, but you want to grow the business.

    What exactly does it mean that he’s doing the “bare minimum of work”? Are there specific tasks that you’re asking him to do, and he’s not doing them? Or are you expecting that he’ll do extra work without being asked? That might be an unrealistic expectation. It sounds like your roommate doesn’t have the same entrepreneurial drive as you do – he might be one of those people who functions best when given clear assignments and boundaries.

    Tell your roommate that you’re so swamped with the business that if he wants to remain an equal partner, he’s going to need to put in some more work. Then tell him exactly what tasks you expect him to do.

    But it’s possible that he doesn’t want to remain an equal partner in the business. So that’s something you should prepare for as well.

  2. Tracy says:

    Different people have different likes and dislikes, what’s weird about that?

    On the other hand, “I’m always taken aback by people who loudly announce that the current event is boring and that booze or spending need to happen in order for them to be placated.”

    … When exactly does this happen?

  3. Johanna says:

    @Tracy: I think it happens right after they high-five each other over their new iPhones.

  4. Lisa says:

    Q3: I’ve had three different dentiists try to pull stunts like that.

    One was pushing invisalign braces. I happen to like the small gap in my teeth and told him so. He excuses himself from the exam room and comes back a minute later with a payment plan. He lost our whole family’s business over that move.

    P.S. I still have four healthy wisdom teeth at the age of 50. My current dentist says they are fine as long as they don’t give me a problem. I love my new dentist.

  5. Norman says:

    I’m confused by your answer to Q5. I didn’t read anything in the question about the U.S. But good advise if applied to anywhere they return.

  6. Becca says:

    #3. You do not need to have wisdom teeth removed unless they are impacted. It is easier to remove them when you are a teenager than later is life, so it is often done as a preventative measure. My brother needed a crown done the his adjacent molar to a wisdom tooth. The dentist did not want to put a crown on it with the wisdom tooth still there, as it might cause problems later. But the wisdom tooth was not impacted, and so was simple for the dentist to remove it in his office, and way cheaper than going to an oral surgeon.
    I also did not have my wisdom teeth removed while young. However, as they are so far back and turned outwards, they are very hard to brush, and have needed to be filled. Recently I broke one, and knew it could not be filled again, and not worth the cost of a crown. My dentist looked at the xray and agreed it would be easy for him to pull in his office. So just the usual shot for local pain, a couple twists and it was out. A total nothing.

  7. Andrew says:

    2 innocuous posts about dentistry stuck in moderation. Maybe if I wrote something confusing New Zealand with the U.S. it would make it through–

  8. DrFunZ says:

    Regarding QUESTION #9: Your friend has not incentive at all to work hard because he gets what he needs (room, board, cash) and you have not asked for much. You need to change the relationship: pay him a just hourly wage and give him whatever cut of your profits you want. BUT, also charge him rent and board. Make it so if he works up to however many hours you need him to work that will equal about what it costs to have him live there. Then any extra he works will give him cash in his pocket. This will be an incentive for him to work harder – the more hours he works, the more $ he gets and the more work you get out of him.

  9. Andrew says:

    Reader mailbag: fun?

    Excellent question! Fun for the commenters; not so fun for those who hope to get coherent and complete responses to their questions.

  10. Eileen says:

    Yes it is concerning that Trent did not pick up on the NZ/US thing. Reading comprehension that poor makes me concerned about the advice ipon this site.

  11. Barb says:

    Q3: Your gut and brain are both telling you to ignore dentist #2. I would advise you to listen! Also, do not mention the wisdom teeth issue to dentist #1 – if it is a problem it is up to her to mention it to you; if she doesn’t mention it, then it isn’t a problem. If you feel uncomfortable with that approach then maybe visit a 3rd dentist, one you have researched ahead of time, and don’t mention wisdom teeth to this one either and see what they say.
    If you bring up a problem area some medical professionals will overcompensate their advice in order to protect themselves. By mentioning a non-issue (ie you have no pain etc) you can give unethical people the opportunity to up-sell you with treatments. Instead let them check you out just as they usually do and at the end then just say “No problems, right?” and if they agree you are done. Don’t fix it if it ain’t broke!! ie – Don’t borrow trouble by asking if a problem exists, doing so solicits them to find a problem.

  12. marta says:

    Q5: Ouch.

    Ditto on the reading comprehension. Maybe it’s not a good idea for Trent to boast about his reading speed (how many books does he go through in a week?) when he displays such dismal reading comprehension in his answers to short and clear mailbag letters.

  13. Courtney20 says:

    You know there’s no 20% tax bracket, right? (answer to Q2)

  14. Steven says:

    I come here for the funny comments…

  15. Tracy says:

    @Steven

    I just show up for the booze and high spending!

  16. Johanna says:

    Simply put, a Simple Dollar drinking game could be more entertaining than the Big Bang Theory.

  17. Kacie says:

    Q3 — Some dentists DO try to upsell! I was upsold on some fancypants toothpaste, and they tried to sell me this electric toothbrush.

    I have 3 cavities that they’re going to repair, but they’re dividing it up so I get 2 done on one day and 1 on another — they get more money that way. GEEZ. So I’m looking into other options, but I’m limited since I don’t have dental insurance.

  18. Kevin says:

    @Q1:

    “Is it possible to continue a life insurance policy into old age? Would it be very expensive?”

    Yes, and yes.

    You can certainly continue a policy into old age, but the premiums get exponentially higher each time the term renews. For example, $500,000 of coverage may only cost $20/month when you’re 25, but by the time you’re 75, your payments will be several thousand dollars per month (yes, per MONTH).

    As Trent said, insurance companies are not in the business of losing money. If your policy promises $x of coverage, then your premiums have been calculated using actuarial tables to determine the likelihood of them needing to pay out before your term ends.

    In short, I know what you’re hoping to do. You’re hoping to find a way where for just a few hundred dollars in payments, you can arrange for a huge windfall for your beneficiaries. Unfortunately, that’s not how it works. Of course, it’s based on averages, and on average, some people will “win” (collect more than they’ve paid in), but overall, more people must “lose” (pay in more than they’ll ever receive back), or the insurance company would lose money and go out of business. There is an element of luck involved (if you die young due to an unpredictable illness), then you “win.”

    The bottom line is, if you want to leave your family money, you’ll be better off just saving it up yourself. There’s no free lunch.

  19. Steven says:

    When I first started reading TSD, it was a useful motivation tool to turn my life around. If I were in a similar situation today as I was then, and found TSD today, I don’t believe I’d find it useful at all. And looking at the RSS numbers, it doesn’t look like the readership has grown much since I first started coming around.

    It’s sad that it appears Trent has more or less given up on the site. The quality of his writing has dropped, and the rehashing of old material has about driven me away for good. The only reason I keep coming back is because the people who comment are consistently thought-provoking, challenging, and intelligent. Even if I don’t always agree with Trent or some of the commentors, I always have food for thought in the comments if not the article.

  20. Leah W. says:

    @Courtney20 — *sigh* — you are completely right. I might venture a guess that, after deductions and credits, many people pay an EFFECTIVE tax rate somewhere around 20%. Still, though…there is no 20% tax bracket.

  21. Tom says:

    Good answer Kevin. I agree with Trent to buy enough life insurance to cover burial costs if you don’t want to burden your children, then get the rest of your finances together on your own.

    What worries me is that you say “I have no money saved or invested and no time left to accumulate even a small fortune.” Does that mean you’re on your deathbed? Because a reputable insurance company won’t even sell you affordable life insurance if that’s the case. Or maybe you mean you have a very limited fixed income that covers only your basic expenses. If that’s the case, and you can’t save any money, sorry that this will sound harsh, but how do you expect to pay premiums for life insurance?

    One other strategy is to clearly state in a will your desire for a simple and inexpensive funeral, and then your children won’t worry about spending a small fortune on it.

  22. Rick Francis says:

    Q7 – Is buying a leather couch wise or foolish?
    That depends a lot on your circumstances. It sounds like you have some reserves, so you won’t have to put it on a credit card. Since your current couch is uncomfortable you should look for a replacement.
    Kids are rough on furniture- new or used. Jumping on a leather couch will damage it just as readily as a fabric couch. Since you’ve done some research on the prices of new couches- you should know how much a new couch would cost. Getting the used couch is going to be more trouble, but is the cost savings is worth it to you? Only look at used couches that are in good shape- something that doesn’t have excessive wear and is still comfortable. You might want to check out moving sales or estate sales where you are more likely to find better quality items. Set a time limit on how long you will look so you don’t take too long searching. If you can find a couch that you will be happy with then consider if the savings are worth the extra trouble to get help to transport it. My guess is that you could save hundreds of dollars and still get a couch you like- so it is probably worth the trouble.
    -Rick Francis

  23. Kevin says:

    And just for fun, here’s how I’d re-word Trent’s opening 2 paragraphs:

    “I’m often blown away by other people’s definitions of fun. For some, you have to have children to have fun. Others seem to require finding any possible way to avoid spending any money.

    “I’m usually pretty happy doing almost anything as long as it stimulates my mind. I’m always taken aback by people who loudly announce that their wants and desires are virtuous, but my own are stupid and shallow.”

  24. David says:

    The trusty back-of-an-envelope method reveals that if you earn $77,500 per year you pay exactly 20% of your income in tax (but of course, you are in the 25% tax bracket). You can probably afford an iPhone, but I would counsel against Norway, where your annual salary would last you about a fortnight.

  25. DOT says:

    Q2.. Seriously, you had to write to a blog on ways to save to pay a tax bill?? Estimate how much you will owe next year and do what ever is best for you..save some every month, every 6 months, every day, never, whatever works for you. I really can not believe you asked that question and Yes, your spouse should have known about the tax liability on his benefits, it is clearly stated in all the paper work he filled out and received when applying for the benefits.
    And as far as the bond question,”It seems that it kind of defeated the purpose of having them if we’re going to get hit with a huge bill because of cashing them in” ..the purpose of having them is that you earned interest, a lot more interest than what your tax bill was. I am assuming they were e or ee bonds and no you can not “cash” them in tax free. Your husband should of known this before he purchased them.
    It seems to me your new husband needs to start paying more attention to his finances.

  26. Kai says:

    I feel similarly on the alcohol. I have been places where people say this would be much more fun with alcohol. And people show it by drinking a lot at Christmas parties and weddings and such.
    I think if you enjoy a beer or a wine or whatever, go for it. But if you can’t have fun without drinking, that’s demonstrating a dependence.

    A lot of dentists believe that people should never have wisdom teeth. If your wisdom teeth have all come in fine, and you’ve never had a problem with them, I’d tell the dentist what he can do with his surgery, and find a new dentist. I ran into the exact same problem with them recommending a removal. Mine came in fine, and have been fine since. It’s an industry standard to do unnecessary surgery as a ‘prevention’ measure. Leave your wisdom teeth alone unless they cause any problems.

  27. DOT says:

    #23 Kevin.. too funny.
    Actually, I don’t drink much at all maybe a few a YEAR and do not need alcohol to have fun, but I must admit the bachlorette party I went to last month where everyone involved consumed ALOT of alcohol was the most fun I have had in a long time.

  28. Gretchen says:

    In Trent’s defense, sometimes I have reading comprehension issues with the questions- but I skim.
    Are these really the best and most easily condensed of the bunch?

    I can’t help but think the opener is some sort of a dig at friends who were at the “super bowl” party, even though that was weeks ago.
    Who says things like that? 21 year olds, perhaps. But rude 21 year olds.

  29. jim says:

    Q1 : Permanent insurance that lasts your whole life is very expensive compared to regular term insurance. If you can’t save money otherwise theen you wouldn’t be able to afford the insurance that lasts into old age either. You’re better off putting that money into savings.

    Q2 : If you don’t know how your taxes work you might want to talk to a tax professional like a CPA. They can explain how the SS will be taxed so you’re prepared. But yes.. if your income exceeds certain limits then SS will be gradually taxed.
    Paying tax on savings bond interest does not defeat the purpose of earning that interest income.
    You can get a tax break on savings bonds if they’re used for education expenses. If you have a child or grandchild in college then paying their tuition could work. You’d have to check into that further for details like income limits. Savings bonds are not subject to state tax so thats another benefit.

    Q3 : Yes get a 2nd opinion from Dr. C. Some dentitsts do upsell but often they just have varying opinions on what is right or necessary. You may have unusual teeth given the history. If you aren’t in pain and theres no immediate danger then certainly don’t rush to get work done that may not be necessary. Wait for Dr C’s opinion.

    Q4 : Melinda, set up an exit plan for your husband’s business venture if things don’t go so well. Either setup a time limit or cash limit so that if he loses money or fails to make enough money that he’ll stop and get a normal job instead. I say this so he doesn’t keep riding a failed business into bankrupcy and/or huge debt, which can often happen. If theres a limit or exit plan then he can stop before you’re out of money entirely and transition back to regular income without spending more money on a failed business. Hopefully he’ll succeed fabulously, but this tactic can help you safeguard against potential failure. Lots of small business fail.

    Q6 : I don’t think short hair alone makes someone appear aggressive. Is there a specific reason you think his sales aren’t as high as you think they ought to be? Did he have higher sales before when he had longer hair? Seems like you’re assuming based on your own perception of short hair.

  30. BirdDog says:

    @Steven#19 – I agree with you. I started reading in 2008 when I was having trouble making myself save money. I found those articles interesting, well-thought, and frankly, far better than most of what Trent has been putting out as of late. In fairness, I’ve tried to be objective. I am in a far different financial place now than I was four years ago so maybe it is me outgrowing the site. However, the quality of writing is suffering and I find the mailbag questions ridiculous. I do enjoy the commenters. The self-righteous tone is wearing thin on me as I enjoy spending a little money on my hobbies and fitness. And guess what, I’ve lost over 100 pounds in the last three years, I don’t have children, I do not play board games on a regular basis but I have still managed to grow my bank account by five-digit sums. As J.D. says, “do what works for you.” I think it needs an addendum for Trent, stop judging those who make different choices. (Side note: I’m not a regular drinker by any means but I enjoy a couple of beers a few times a year.)

    I try not to complain about a site that costs me nothing to read each day and I do appreciate the work that Trent has done. No one forces me to read it but at this point, I keep coming back just to read the comments.

  31. jim says:

    There are 2 ads on this page right now. One is for a Samsung smart phone. THe other is for GoodAccountants.com. CutMedia is pretty smart. They know that Trents readers are all wasting money on iPHones when they could instead be using a Samsung. They also know that people need another source for tax advice.

  32. Ryan says:

    I don’t know anyone who has to drink to have fun. They like to drink…because it is fun. Going to a party or concert is fun. Then, you drink (if you want) and it often becomes an even better time.

  33. Kai says:

    If you can’t have the same level of fun without alcohol, you’re depending on alcohol for enjoyment. that sure seems indicative of a problem. A socially-acceptable dependence for sure, but still questionable. If you need to alter your mental state to either enjoy yourself, or to give yourself an excuse for what you do to enjoy yourself, you have a problem.

    I don’t think Trent would lose his weight even if he did spend a bunch of money on it, since he has regularly demonstrated an unwillingness to make it a time priority.

  34. mary w says:

    Q8. I think Trent only answered part of your question. I agree with him that in your case “saving is investing.” You’re a ways from being in a position to seriously save for retirement.

    With regard to your other questions. Don’t pay off your 0% cc. Figure out how much a month you need to pay so it is paid off the same time the 0% interest is up. Then with whatever extra money you have monthly, I would save it in a saving account until you have enough to pay-off the 8% car loan. In the meantime you’ve got a larger e-fund which you can replenish when you no longer have a car payment.

  35. Jennifer says:

    TSD is in major need of a makeover. The Reader Mailbag used to be my favorite series, but it’s just not what is used to be. A format like GRS would be much better, where a reader question prompts a column. The reader questions in this series need to be streamlined big time, edited for clarity and given a thoughtful, well-written response.

  36. Sam says:

    Didn’t Trent brew beer as a hobby? I suppose once it was finished brewing he either dumped it out or sat around drinking it alone with a scowl on his face. I know if I saw him having fun with his friends drinking the beer I’d be blown away by his needing alcohol to have fun!

  37. SwingCheese says:

    @#36 Sam: You beat me to it! I was just thinking about that. My husband made me a birthday beer today, and we do enjoy drinking his (and others) homebrew at our game nights. So I agree that no, it isn’t necessary, and I think it would be rude to mention that “X would be so much MORE fun with booze”, but it strikes me as an odd thing to say from someone who once took an interest in making his own craft beer.

  38. Amanda says:

    I don’t understand why Trent even includes his weird blurbs before the reader series. Just get to the questions.

    Q8–8.24% and 13K is a high amount on that car loan! Can you look at selling the car and getting a reliable, but used car to get rid of the monthly payment? Or refinance?

    How much is your tax refund? Is it enough to pay off the car? 1% isn’t going to do you much if you’re paying 8.24% on a car loan, but I suspect you’re not getting $13K from your refund to completely pay that car off.

    We really do need more details–how much extra cash are we talking once you account for the credit cards?

    About that 0% CC, make sure to read the fine print to see when the interest actually starts accruing from, and consider paying it off a full month before the 0% is supposed to run out just to be safe.

    What is the family/friends situation like where you live? Do you have anyone you can depend on in a pinch? If so, I’d probably snowball down that car loan. If not, I’d probably build up my emergency fund.

    I wouldn’t take on a house with a “really tight” budget, $13K in debt, and a $1,000 emergency fund. The minute something big happens to the house like a flood or the heater going out, you would be screwed.

  39. Amanda says:

    Q8–

    Forgot to add, about the furniture: Craigslist, local colleges, end of the school year. You can find cheap/free stuff.

  40. Kai says:

    I think there is a difference between enjoying a good beer, or a good glass of wine in the same way that one enjoys a good steak or a good pasta, as compared to not having fun without ‘drinking’ in general, which typically means consuming alcohol with the goal of being drunk.
    Enjoying a good beer (purchased or home-brewed) with some friends is different from being unable to have any fun unless using alcohol to alter your mental state.

  41. Petra says:

    @Q3 my dentist explained it to me as follows: the problem with wisdom teeth is that they can get infected and then you need antibiotics and more complicated “surgery” to get them out. However, it is absolutely not sure that they will get infected, certainly not when they are deep in your jaw and there is a whole lot of tissue (your gums I believe it is called in english) on top of them to protect them from bacteria.

    Dentists still like to remove your wisdom teeth around age 18 to prevent the chance of them getting infected. The attachment of the wisdom teeth to the jaw is still flexible then. The older you grow, the more difficult it is to get them out, meaning getting hem out may be more trouble then leaving them in and maybe, just maybe, get an infection.

    Since I was moving around a lot during ages 18-25, I never got them out then. Now my dentist says my best chance is to just leave them in and hope they don’t get infected. So far, so good.

    I think your first dentist saw that your wisdom teeth are indeed in a good position so that there is little chance of them getting infected. The second one could be a mix of “money money money” and maybe old-fashioned ideas…

  42. Kathryn says:

    Craigslist has beautiful “for sale by owner” leather couches. No need to pay full price to a dealer.

    I, also, am 50 YO with 4 wisdom teeth that never came in (i guess that is “impacted.”) They have never given me any trouble. I read a few years ago that wisdom teeth rarely need to be removed – unless you play contact sports. They stated that having wisdom teeth when playing contact sports raises the risk/chance of getting a broken jaw.

  43. deRuiter says:

    Q 3, If you need wisdom teeth removed, choose a reltively young, strong male dentist who will pull them out inexpensively, 2 the first week (same side), and two the second week. (Not being sexist here, men tend to have more arm strength, a female dentist who lifts weights competitively as a hobby would be equally capable.) You can negotiate the fees, and offer to pay cash as you will most likely get the job done for much less than the price quoted. A female dentist may not have the physical strength to do the easy job of tooth pulling right in the office with a bit of novocaine and a prescription for antibiotics to go. Ditto an old dentist. You most likely wouldn’t need an oral surgeon. If the wisdom teeth don’t bother you, you can leave them for now. The “certain strange signs” to which the author alludes may be kickbacks for referrals.

  44. Mel says:

    Q5: We did pretty much exactly this 5 years ago – left NZ and travelled before moving to my partner’s home country. What is it with kiwis? :)

    I might not be able to answer your exact question but can offer some general advice. Our initial plan was to enjoy the summer then look for work. My partner found a great job almost before he started looking but I wasn’t so lucky. It took me ages to find a job and I then struggled to keep any. The language barrier was a much bigger and more subtle problem than it seemed – even in apparently English-speaking environments. I had savings in NZ (kiwibank) which turned out to be a life-saver and meant I wasn’t completely reliant on him.

    Long story short:
    1) spend a good chunk of time focussing 100% on the language. Relying on him for everything from dealing with beauracracy to making doctor appointments isn’t easy for either of you. I still haven’t done this, and now with a small baby it makes life more complicated. I need to take my own advice…
    2) have more money available than you think you’ll need. (well, duh!)
    3) make sure all the money is accessible, even if you only plan to use it when you return. I have a decent amount in bonus bonds, but it’s completely untouchable until I go back. If I’d given someone power of attorney they’d be able to get at it for me. I didn’t plan on needing it but it would’ve been useful to have that money when we had 0 income for several months just after we got married and bought a house!

    Good luck – you’ll need it! But it’s definitely worth it.

  45. SwingCheese says:

    Kai, I agree. It seems like many people in my area of the country feel that one must either be a teetotaler or a lush, and there is no in-between. I know this is not the case elsewhere, and I find the assumption that, if I drink at all, I must be drinking to excess, to be obnoxious. (I don’t know that Trent feels this way, so I’m not referring to him in particular.)

  46. Jackowick says:

    Q6 I hate to say it, but unless the reader discloses a specific incident, this is coming off as a pushy/busybody spouse.

  47. Courtney20 says:

    I have a very small jaw and facial features (I buy kids eyeglasses, for example) and when my wisdom teeth tried to come in there was no room in my jaw for them to come up so they went sideways instead. Out they came when I was 18.

  48. K says:

    Q7: You’re a “SCIENTIST” and you can’t figure out how to buy a couch? Huh?

    I hope I never take any of the drugs you develop,
    rely on your testing results for any reason or run into you at any scientific meetings I go to, ccause I’ll slap you silly.

  49. Misha says:

    Well, guys, remember what it says when you go to Trent’s personal home page: “I’m a writer living in Iowa. I founded TheSimpleDollar.com and watched it grow up and leave home. Now seeking new challenges and adventures.”

  50. Baley says:

    Regarding needing alcohol to have fun: I actually know what Trent’s talking about here. One time my boyfriend (now husband) and I went out to eat and an older couple (he older than she, by appearances) started up a discussion with us (I don’t remember why or what it started about). Anyway, they were having some drinks and offered to buy us some and we declined (we do drink occasionally but didn’t at the time), and they asked us how we could be together, on a date, without alcohol! (In maybe a few words more or less.) Our perception was that they had to drink in order to have fun on their date, in order to even get along. I don’t ever want to come to that point. Some people actually require alcohol in order to enjoy themselves, and that’s what Trent’s talking about. Same thing with spending money. He’s not condemning either, just saying we should be able to have fun without them.

  51. AnnJo says:

    Q3, I also had a dentist, on my first visit to him, insist that I absolutely needed my wisdom teeth extracted. They had all come out, but little flaps of tissue on the lower ones made them hard to keep brushed, and those developed small cavities. I was about 25 at the time.

    I declined and suggested he cut off the flaps of tissue, so the problem wouldn’t recur. After some argument, he did what I asked, and 35 years later I still have them and aside from one more small cavity, have never had any problems.

    This kind of procedure is not an emergency, so there’s time to get a detailed explanation from the dentist for the reasons for his recommendation, and then research that independently as well as through a second opinion.

  52. jim says:

    Its not hypocritical to enjoy an occasional beer yet feel that alcohol isn’t a necessary requirement for fun.

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